Mortgage approvals have dropped 11% year-on-year in August, up from a 62% drop in May, according to new Central Bank data.

And household use of overdrafts is down 25% year-on-year from May to August.

The regulator suggests in a new report that households may require additional tailored supports as payment breaks expire.

The Central Bank’s special edition of the Household Credit Market Report 2020 (HCMR), providing information on the household credit market since the emergence of COVID-19 and the movement of over a million individuals in the labour force to state income support.

Mortgage credit

The HCMR gives granular detail on the allocation of new mortgage credit in the first half of the year. 

Despite the pandemic, loan-to-value (LTV) and loan-to-income (LTI) ratios were consistent between Q1 and Q2, as were borrower incomes, demographics, property sizes and loan terms – although a portion of this lending would have approval predating the pandemic.

Mortgage payment breaks were most common among loans with a previous modification (40%).

Unemployment payments

In addition, counties with high rates of pandemic unemployment payments (such as Kerry and Donegal) and Dublin commuter counties (with many mid-2000s mortgages) had higher mortgage payment break shares.

Loans issued since the introduction of the mortgage measures in 2015 were less likely than the average mortgage to be on a payment break.

Both first-time-buyers (FTBs) and second-time-buyers (STBs) with high origination loan-to-income ratios had a higher propensity to be on a mortgage payment break.